Bognor outperforms Chichester by 28%

This article was featured in The Chichester Observer's property section on 12th June 2014.

  

Last week a retired couple, who had recently moved to Fishbourne, asked me for some help buying their first buy-to-let. Having decided they specifically wanted to look at 3 bedroom semi-detached houses, they asked me whether they should focus on Chichester or Bognor Regis, where they presumed they could get better value for money and thus a better return.

Taking a quick look at the market it became clear that on the face of it, Bognor Regis does indeed serve up the better proposition, with 3 bed semis starting from £185,000 versus around £250,000 for a similar property in Chichester.

The rent on these properties only differs by around £50 per month; approximately £850pcm in Bognor Regis and £900pcm in Chichester. Therefore the respective yields come out at 5.5% for Bognor Regis and just 4.3% in Chichester, which is a staggering 28% difference!

This clearly makes Bognor Regis the obvious place to buy for investment.

This, however, is a great example of the annual rental return or yield not being the only factor when choosing an investment property.

Digging a little deeper showed there were currently 12 three-bedroom semis available to rent in Bognor Regis, but only 2 had been let. In Chichester however, of the 10 available, 4 had already been let, showing a stronger demand for said properties.

As a landlord, minimising your voids is critical to maximise your return on investment. It is therefore crucial that you assess the level of demand for your chosen property. Having a vacant property would soon take the shine off Bognor Regis’ 5.5% yield, as the reality significantly reduces this headline grabbing return.

We should also consider how much the value of the respective properties might go up in the future. As discussed in my previous columns, it is this long term capital growth that has proven to provide the biggest contribution to your overall property investment returns.

In the past five years, semi-detached houses in Bognor Regis have risen in value by an average of 20%, whereas in Chichester they have outperformed considerably with an increase of 42%. Should Chichester continue this trend in the future it would turn what on the face of it looks like a ‘no brainer’ in Bognor Regis’ favour, into a far more challenging contest.

This is why when looking to invest in property it is important to dig a little deeper and not just rely on the headline figures.

If you would like more info on the local property market you may be interested in our Summer issue of ‘Chichester Property News’. It features the latest average property values, rents and yields in Chichester and it is available to download, completely free of charge, from our website now.

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If you are looking for an agent that is well-established, professional and communicative in Chichester, then contact us to find out how we can get the best out of your investment property.

E-mail me on clive@crjlettings.co.uk or call 01243 624 599.

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